Apar Industries Ltd. (APARINDS) - Auditors Report

Company auditors report

To the Members of APAR Industries Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of AparIndustries Limited (the Company') which comprise the Balance Sheet as at 31stMarch 2017 the Statement of Profit and Loss (including other comprehensive income) theStatement of Changes in Equity and the Cash Flows Statement for the year then ended and asummary of the significant accounting policies and other explanatory information (hereinafter referred to as "Standalone Ind AS Financial Statements").

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 (the 'Act') with respect to the preparation of thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance including other comprehensive income cash flows and changes inequity of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) prescribed under Section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting Policies; making judgements and estimates that arereasonable and prudent; and design implementation and maintenance of internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the Standalone IndAS Financial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Standalone Ind AS financialstatements based on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and Rules made thereunder. We conducted our audit in accordance withthe Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind AS financial statements. The procedures selecteddepend on the auditor's judgement including the assessment of the risks of materialmisstatement of the standalone Ind AS financial statements whether due to fraud or error.In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone Ind AS financial statements thatgives a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and reasonableness of the accounting estimates made by the Company'sDirectors as well as evaluating the overall presentation of the Standalone Ind ASfinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Act in the manner so required and give a true and fair view in conformitywith the accounting principles generally accepted in India including Ind AS of thefinancial position of Company as at 31st March 2017 and its financial performanceincluding other comprehensive income its cash flows and Statement of changes in equityfor the year ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 (the Order')issued by the Central Government of India in terms of Section 143(11) of the Act we givein the Annexure A' a Statement on the matters specified in paragraphs 3 and4 of the Order

2. As required by Section 143(3) of the Act we report that:

(a) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit;

(b) in our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books;

(c) the Balance Sheet the Statement of Profit and Loss the Cash Flow Statement andthe Statement of Changes in Equity dealt with by this report are in agreement with thebooks of account;

(e) on the basis of the written representations received from the directors as on 31stMarch 2017 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2017 from being appointed as a director in terms of Section164(2) of the Act; (f) with respect to the adequacy of the internal financial controlsover financial reporting of the Company and the operating effectiveness of such controlsrefer to our separate Report in Annexure B';

(g) with respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rule 2014. In our opinionand to the best of our information and according to the explanation given to us; (1) theCompany has disclosed the impact of pending litigations on its financial position in itsstandalone

Ind AS financial statements (Refer Note 44 to the Standalone Ind AS FinancialStatements); (2) the Company have long-term contracts including derivative contracts forwhich there are no material foreseeable losses (Refer Note 35-41 and 49 to the StandaloneInd AS Financial Statements); (3) there has been no delay in transferring amountsrequired to be transferred to Investor Education and Protection Fund by the Company; and(4) the Company has provided requisite disclosures in its standalone Ind AS financialstatements as to holdings as well as dealing in Specified Bank Notes during the periodfrom 8th November 2016 to 30th December 2016 and these are in accordance with the booksof accounts maintained by the Company (Refer Note 50 to the Standalone Ind AS FinancialStatements).

Annexure A' to the Independent Auditor's Report

The Annexure referred to in Independent Auditor's Report to the members of the Companyon the Standalone Ind AS Financial Statements for the year ended 31st March 2017 wereport that;

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of the fixed assets bywhich fixed assets are verified in a phased manner programme of verification. Inaccordance with this programme certain fixed assets were verified during the year and nomaterial discrepancies were noticed on such verification and in our opinion isreasonable considering the size of the Company and nature of its assets.

(c) According to the information and explanations given to us the title deeds ofimmovable properties (including land whose title deeds have been pledged as securitiesagainst term loan borrowed by Company) are held in the name of the Company.

(ii) As explained to us inventories have been physically verified by the managementduring the year. In our opinion the frequency of such verification is reasonable. Thediscrepancies noticed on such verification which were not material have been properlydealt with in the books of account.

(iii) According to the information and explanations give to us the Company has notgranted loans secured or unsecured to the Companies firms Limited LiabilityPartnerships or other parties covered in the register maintained under Section 189 of theCompanies Act 2013. Accordingly the provision of Paragraph 3(iii) of the Order is notapplicable to the Company. (iv) According to the information and explanations given to usthe Company has complied with the provisions of Sections 185 and 186 of the Act in respectof loans investments guarantees and security. (v) According to the information andexplanations given to us and the records examined by us the Company has not accepted anydeposits from the public during the year. Accordingly the Paragraph 3(v) of the Order isnot applicable to the Company.

(vi) We have broadly reviewed the books of account and records maintained by theCompany specified by the Central Government for the maintenance of cost records underSection 148(1) of the Act with respect to its manufacturing activities and are of theopinion that prima facie the prescribed accounts and records have been made andmaintained. The contents of these accounts and records have not been examined by us.

(vii)(a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company the Company is generally regular indepositing undisputed statutory dues including provident fund employees' state insuranceincome tax sales tax service tax duty of customs duty of excise value added tax cessand any other statutory dues where applicable to the appropriate authorities. Accordingto the information and explanations given to us there are no arrears of outstandingstatutory dues as at the last day of the financial year for a period of more than sixmonths from the date they became payable.

(b) According to the information and explanations given to us and the records examinedby us the particulars of income tax sales tax service tax duty of customs duty ofexcise and value added tax as at 31st March 2017 which have not been deposited onaccount of a dispute pending are as under: (viii) According to the information andexplanations given to us and as per the records of the Company examined by us the Companyhas not defaulted in repayment of loans or borrowings to banks. The Company has not takenany loans or borrowings from financial institute and Government. The Company has notissued any debentures. Accordingly the Paragraph 3(viii) of the Order is not applicableto the Company.

(ix) According to the information and explanations given to us the Company has notraised money by way of initial public offer or further public offer (including debtinstruments) and by way of term loan. Accordingly the Paragraph 3(ix) of the Order is notapplicable to the Company.

The Central Excise Act 1994 The Customs Act 1962 Service Tax under the Finance Act 1994.

Duty Service Tax Interest and Penalty

1.73

2004 to 2007

Commissionerate

2007-08

2008 to 2012

5.72

1997 to 2001

CESTAT / Tribunal

2001 to 2004

2004-05

2007-08

2008-09

2011-12

2.32

1998-99

High Court

2005-06

2006-07

5.30

1995 to 2000

Supreme Court

2001 -02

(x) During the course of our examination of the books and records of the Companycarried out in accordance with generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyfraud by the Company or any fraud on the Company by its officers or employees noticed orreported during the year nor have we been informed of such case by management.

(xi) According to the information and explanations given to us the managerialremuneration has been paid or provided in accordance with the approvals mandated by theprovisions of Section 197 read with Schedule V to the Act.

(xii) According to the information and explanations given to us the Company is not aNidhi company. Accordingly the Paragraph 3(xii) of the Order is not applicable to theCompany.

(xiii) According to the information and explanations given to us all transactions withthe related parties are in compliance with Sections 177 and 188 of the Act whereapplicable and the relevant details have been disclosed in the financial statements etc.as required by the applicable accounting standards. (xiv) According to the information andexplanations given to us the

Company has not made any preferential allotment or private placement of shares or fullyor partly convertible debentures during the year. Accordingly the Paragraph 3(xiv) of theOrder is not applicable to the Company.

(xv) According to the information and explanations given to us the Company has notentered into any non-cash transactions with directors or persons connected with him duringthe year. Accordingly the Paragraph 3(xv) of the Order is not applicable to the Company.

(xvi) According to the information and explanations given to us the Company is notrequired to be registered under Section 45-IA of the Reserve Bank of India Act 1934.

Annexure B' to the Independent Auditor's Report

Report on the Internal Financial Controls Under Clause (i) of Sub- Section 3 of Section143 of the Companies Act 2013 (the Act')

We have audited the internal financial controls over financial reporting of AparIndustries Limited (the Company') as of 31st March 2017 in conjunction with ouraudit of the standalone Ind AS financial statements of the Company for the year ended onthat date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (theGuidance Note') issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Companies Act 2013 (theAct').

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note and the Standards on Auditing issued by ICAI and deemed to beprescribed under Section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that: (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2017 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.